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London tycoons lose billions in meltdown
Jonathan Prynn, Hugo Duncan and Joe Murphy09.10.08
The financial meltdown has cost London's tycoons billions.
Their losses will have a massive impact on the city's economy, forcing hundreds of shops, bars, hotels and restaurants to close.
Steel magnate Lakshmi Mittal was the biggest single loser after seeing £20 billion wiped off the fortune that made him Britain's richest man.
UK property tycoon Robert Tchenguiz is facing losses of up to £1 billion after borrowing heavily from Icelandic bank Kaupthing. Dozens of wealthy Russian and east European oligarchs with properties in London have also suffered huge falls in their fortunes, the Standard has learned.
City bonuses could be down as well this year— forecasters expect them to fall by £5 billion, almost 60 per cent, as banks cut back.
The loss of billions of pounds of spending power will also bring big falls at the top end of the property market. Mr Mittal, who owns some of London's finest homes including two in Kensington Palace Gardens, has seen the value of the shares he and his family hold crash from £33.24 billion in June this year to £11.82 billion today. Over the last four months he has lost the equivalent of nearly £180 million a day or some £7 million an hour.
The 58-year-old is head of the Arcelor Mittal steel empire, on the board at Goldman Sachs, and has a 20 per cent stake in Queens Park Rangers Football Club.
As well as seeing the value of his Arcelor Mittal shares plummet, Mr Mittal has made losses on his investment in RAB Capital, the hedge fund group which took a massive bet on the recovery of Northern Rock before it collapsed and was nationalised. He runs the steel business with son and heir Aditya and recently said: “Money is a curse.”
The scale of the losses dwarf those of others in the top 10 victims of the financial crisis, including Newcastle United FC and Lillywhites owner Mike Ashley, Tottenham Hotspur investor Joe Lewis and Conservative Party treasurer Michael Spencer.
Mr Mittal is followed on the loser board by mining chiefs Vladimir Kim, of Kazakhmys, and Anil Agarwal, of Vedanta Resources. Both firms are recent listings on the London Stock Exchange but have seen their value tumble since the spring on the back of falling metal prices.
Mr Ashley is the fourth biggest loser from the crunch and has seen the value of his stake in Sports Direct, the retail giant he set up and floated on the London market, dive from £1.17 billion in February last year to just £168 million today. That is a loss of £1 billion.
Billionaire trader Mr Lewis, majority owner of Spurs, lost £602 million after the collapse of Bear Stearns.
Many of the Russian oligarchs who have done so much to push up London property prices in recent years are also said to be in trouble. Kirill Pisarev, chairman of London-listed property developer PIK and owner of a £15 million flat in Knightsbridge, has made a paper loss of more than $2 billion.
Alexander Lebedev, part owner of Aeroflot and organiser of an annual Hampton Court charity ball, has admitted that he has lost two thirds of his £1.7 billion fortune.
City bonuses are forecast by think tank CEBR to fall by more than half this year to their lowest level in a decade. The think tank expects the bonus pool to fall to just £3.55 billion, down 58 per cent from last year's £8.514 billion, and the lowest since 1998. It will fall again next year to £2.769 billion, says the CEBR.
The all-time peak was £8.8 billion in 2006, when more than 4,000 “masters of the universe” got more than £1 million. The fall in bonuses will have a huge impact on London's “bonus belt” — the line of wealthy neighbourhoods stretching from Islington to Wandsworth.
Reader views (28)
Here's a sample of the latest views published.
My, my what an orgy of shadenfraud, I’m sure mostly made from thinly veiled envy. Off course, anyone with money is greedy and anyone without is lazy and shiftless by default. Once we have ordered the world in line with our narrow-minded perceptions it’s much easier to deal with!
- Nj, London
Personal wealth should be capped at £1 million.
- Mikko Takala, Drumnadrochit, Scotland
The true nature of these losses is seen in the photo on the same page with Michael Spencer described as "City's top player".These "players" are all too often gamblers risking other peoples money to make obscene personal profits.
- C Adams, pont l abbé france.
This is the pleasing side of the current crisis!
- David Chown, bordeaux france
methinks that Stephen Rothbart doth protest too much. what's the betting that he is earning an absurdly high amount for what he does, or worse, works in the banking industry. I never understand why these people spout off about "working hard", as if no-one on a normal salary does it. Memo to Stephen. Everyone would work long hours if they were being obscenely paid for it.
- Mark T, Sydney, Aust
These people don't get to be tycoons by splashing their cash around, so it won't be costing anyone else a penny!! This party may be over for them but I'm sure there will be others.
- Mark T, Sydney, Aust
I feel for those who have lost money, but at such a time as this, one cannot help but remember, "For what is a man profited, if he shall gain the whole world, and lose his own soul his own soul?" ~Matthew 16:26
- Francis, London
"Oppressing the poor for profit or giving to the rich certainly leads to poverty."
Proverbs 22:16
- Chic, London
..urm..what goes up comes down and as the markets recover, these are just paper losses for most, they have money to reinvest and the market will recover and they will be quids in again. Its a financial loss if anyone is forced to cash in now...and now is the time to buy...(I hope!)
- Bubbles The Chimp, London, England
Eery week poor people buy lottery tickets in the hope of winning one million pounds. A lot of these billionaires have not won the lottery but have effortlessly surfed the upward waves of big business. They don't just own one home to live in but have multiple houses. Most of us could get by on a million pounds and could not even imagine having one billion pounds. So don't expect sympathy.
- Arthur Atkins, Brentford
Chin up everyone. Money is relative. Yes you have lost a paper 50K on your house but guess what so has everyone else on your street. As for the super rich money is probably irrelevant as they probably live off the interest from their investments and one day the shares will be worth £120 billion and another day they will be worth £500 billion. So what? Big deal. Life goes on.
- Rupert, London
Any company which has had to be part-nationalised should not pay a bonus to a single member of staff. Tax-payers money should not be used to reward bankrupt firms.
- Claire, London
Like they are going to be skint!!!! Make me boil!
- Vikki, Bristol
Does this mean London prices will become more realistic? I bet Selfridges/Harrods etc are shivering with anticipation..This is not going to have any impact on most normal Londoners
- Ade, London
I am amazed he has the nerve to talk about irresponsibility. Labour are responsible for most of the problems in the economy, and the government is comprised of people who couldn't make in the real world - in other words have never had a job.
Like Tony Blair Brown is probably hoping that in 5 years he will be on the board of an investment Bank. I hope they seize their pensions to pay for the damage he has done.
- Stefan, London
How can our "illustrious" inept leader really comment on irresponsible behaviour when he has been promoting/encouraging national and individual debt over the last 10 years to what is now at a frightening dangerous level. The UK has the higest amount of personal debt in Europe, and this has been continually encouraged by that idiot....that is irresponsible behaviour!
- Jb, London
So Mr Mittal thinks "Money is a curse"? Well, if he wants to rid himself of this curse, he's invited to send me some of it, and help me get out of the curse that is not having enough money.
- Polly, London
So it's not all bad news then!
- Jo, London, UK
one year before every 3 month we inform to the government no body responds.untill toay.we have a good way to stop this (without any expensive) within a year.
- Mohammed, London-uk
The only real problem with this is that the 'lost' money will probably not reach those who most need it.
- John, London
I'm stoopid,please explain something to me.
I buy a share for say 20p, over time it is worth, to some city spiv £1, then another city spiv says its only worth 50p today, therefore I am still 30p up and done sod all for it,
How have I lost the 80p difference which I never had in the first place?
I'm so glad I've always been skint.
- Kedge, Marlboro wilts
Raymond. Please would you explain to me why you call these people " parasites " ?
- Michael, Switzerland
How do you know who is a parasite, Raymond? Just becasue someone has money does not mean they did not work hard for it. Some made it by stealth, some through sheer hard work and some through luck. Is JK Rowling worth her millions, or was she lucky, or did she work hard? These losses will affect every one of us eventually. So this is no time for gratuitous insults.
Gordon Brown is shameless and the biggest hypocrite. If anyone should be under investigation, it is him, but like every politician, all the good things are because of him, and all the bad things are someone else's fault.
Now there is a parasite.
- Stephen Rothbart, Prague, Czech Republic
Mr. Mittal loses £20bn in non-real money and we're expected to panic that he'll not be able to afford to spend quite as much now he's down to his last £11bn? Don't get it myself.
However, on the bright side we'll now find out if 'trickle down' really was just made up as an excuse for the naked greed of an elite.
- Tom, London
While I don't feel sorry for the billionaires or bankers the fall out will hit small businesses - restaurants, shops, taxi drivers etc.
How will the government replace the tax and nic it gets from the bonuses? Work out just how much it won't get on the £5 billion not being paid out. Tax 40%, NIC 12.8% plus employee nic 1%
Someone will have to pay
- Alison, Cyprus
What a choker.
- Jimbob, Kensington
Another hard hitting interview by Brown on GMTV. Perhaps whilst he is there he could do the weekly review of soap news.
- Fly, london
OH how my heart bleeds for these parasites.
- Raymond, Stoke on Trent
